MNP to have no major impact on telcos: Fitch

Fitch Ratings has alleged that mobile number portability (MNP) is unlikely to hit operators, considering the dominant prepaid nature of the market and high churn rate, and opined that India will not behave too differently from the rest of Asia on this matter.

According to Fitch, MNP is unlikely to have any significant negative impact on operators, considering the dominant prepaid nature of the market and high churn rate. However, MNP, which allows a subscriber to change his/her operator but retain the number, is likely to intensify competition on the postpaid front, but this segment represents only five per cent of the 600 million subscribers.

The rating agency stated that postpaid subscribers will display a certain level of brand stickiness, and hence are unlikely to switch over due to minor pricing reasons, considering that the differential in calling expenses will be negligible as percentage of a subscriber’s disposal income. But, the pricing pressure, which has so far been more on the prepaid segment, will spread to the postpaid category with MNP, though to a lesser extent. Fitch also expects only limited impact of higher subscriber acquisition and retention costs on overall operating margins.

After much uncertainty, the Telecom Ministry launched MNP in Haryana on November 25. Originally the scheme was scheduled for 2009. Yet, the rest of the country will not have this facility before January 20.